Women are disproportionately underrepresented in secured loan products, both in terms of consumer numbers and market exposure Photo: Pexels.com
Women’s month has come and gone, but their financial deposition has not. According to the latest Experian Consumer Default Index (CDIx) for the second quarter, South African women account for half of the total amount of consumers on the credit bureau. This means that in terms of being credit-active, women are fairly represented in the credit economy. From a credit exposure perspective, however, only R0.8 trillion out of the full R2.18 trillion in outstanding debt is associated with women.
“In fact, women are disproportionately under-represented in secured loan products, both in terms of consumer numbers and market exposure, with only 33% of home loans and 37% of vehicle loans exposure being associated with women. Interestingly, however, the data shows that women constitute approximately two-thirds of the market for retail loans, both in terms of volume and value. This is the single credit product that is mostly used by South African women who are credit active,” said Ans Gerber, head of data insights at Experian.
Despite the under-representation in secured credit, the number of women in credit has shown a proportional increase in the last three years. This has been echoed for most of the individual credit products, except for personal loans, where women have seen a slight reduction in representation. Encouragingly, female representation for secured credit has increased meaningfully over the past three years, with home loan representation moving from 36.2% to 37.7% (+1.5%) and vehicle finance increasing from 41.3% to 43.3%.
The report showed that despite a slight quarter-to-quarter reduction in appetite for consumer credit for the first time in no less than two years, as per data prepared by the National Credit Regulator, that appetite remained high. This emphasises the fact that, in general, consumers are looking for credit to cover the shortages in their cost-of-living expenses. In addition, approval levels have dropped, resulting in the approval rate now being below 30%. This means that over 70% of applications are rejected. This non-approval partly stems from consumers’ affordability, which has come under pressure in the context of the high consumer price inflation rates as well as the high interest rate prevailing in the market.
The composite CDI exhibited a quarter on quarter deterioration from 4.56 in March 2023 to 4.89 in June 2023 predominantly due to the persisting high and increasing interest rates of the second quarter. Year-on-year the CDI saw a significant deterioration from 3.83 to 4.89, which demonstrates that the high cost of living as well as other influences, such as the increased need for alternative energy solutions, have also had a negative impact on the consumers’ ability to honour debt commitments.
The deterioration was seen across all credit products, but most notably for Home Loans and Credit Cards.
From a consumer segmentation perspective, the biggest relative deterioration was seen in the “Luxury Living” segment. Although these consumers are typically of the highest affluence (and generally represent the lowest credit risk), their CDI has been under severe pressure – particularly since the pandemic and even more severe and sustained over the past six months.
The mid-affluence – Stable Spender – and Money Conscious consumers are still showing slower relative change than high-affluence consumers.
For “Laboured Living” the report saw continued year-on-year deterioration, but an improvement quarter-on-quarter with the “Yearning Youth” has not only shown quarter-on-quarter improvement but also the slightest of improvements year-on-year.
From a gender perspective, historically South African women have been in a more favourable position than their male counterparts, having a Composite CDI that was consistently below the total Composite CDI. However, over the past six months, the report showed that women’s CDI moved closely to the Composite CDI to that of the total market.
Gerber said: “Considering many consumers are turning to credit to make up for the shortfalls in their cost-of-living expenditures, this trend also suggests women are actively utilising their credit facilities to keep households afloat. To this end, we encourage all South Africans, women and men alike, to manage their budgets carefully and create strong financial disciplines.”
Experian has recently launched Up, a free financial education, budgeting and credit report web-based app, that aims to help South Africans take control of their financial health and credit scores.
By accessing their Experian credit report and credit score free of charge via the web app, consumers can ensure that all their information is accurate and up to date, enabling them to stay on top of their credit profile on a regular basis. And for a woman like me, who’s credit card has more of a target than a limit, taking a closer look at my credit profile seems like a good idea.
PERSONAL FINANCE